The Canadian Revenue Agency (CRA) in order to encourage taxpayers to disclose their uninformed, incorrectly informed or missing tax return information, avail the Voluntary Disclosure Program (VDP) and escape the probability of being prosecuted or penalized by the CRA in case they decide to audit your returns and find out the missing or incorrect information through CRA appointed auditors.
Through the VDP, any taxpayer can voluntarily disclose any income that as not present due to any reason in the filed tax return or confess any extra expense that may have been shown in the tax return. The reward CRA offers in return of VDP is waiving off the chances of being prosecuted in wake of tax evasion. This program basically promises a taxpayer that if it is applied conforming to the conditions CRA levies for it, CRA will not impose any civil penalties and also reduce interests that would otherwise be charged.
People who purely on voluntary basis disclose any error or mistake in the tax returns actually save themselves from criminal prosecution charges and civil penalties. The CRA will only be paying the original tax amount and any interest that levies however penalties of any kind will be waived off. In certain situations also where any uncontrollable circumstance may be in play, even interests on taxes can be waived off. CRA also offers the provisions of disclosing under the ?no name policy? where anonymous disclosure reveals the identity of the taxpayer.
VDP can also be applied for in cases where no initial tax return has been filed and no taxes have been paid whatsoever. CRA levies four conditions which render a taxpayer as being eligible for applying VDP. These conditions include
– Making a disclosure that is purely voluntary and is not being done under pressure of an investigation that has either started or is in way
– Making a disclosure that is accurate and no further incompleteness or errors remain
– Making a disclosure only if some kind of penalty involving factor is present in the tax return procedure. Normal tax return will be filed normally.
– The disclosed information resulting in VDP form should be older than a year and should not be used as an excuse to simply file late returns for the year and avoid penalty.
Although CRA Voluntary Disclosure Program looks like an easy way through tax problems that have built up for an individual however it should be remembered that hiring professional help from an expert even in this regard is essential. VDP as a form of tax amnesty is still subject to CRA audit. This means that after submitting the disclosure and related details CRA can still audit the given information and ill also question the individual regarding income and other related things. These things can be used against an individual if he or she defaults ever again.
VDP may provide tax amnesty for single time however the CRA takes extra precautions for these individuals in future and in case they plan to audit the individual sometime in future, they consider every detail very seriously. It is therefore suggested that hiring a tax expert from a reputed firm such as Tax SOS will ensure proper and accurate filing of tax returns so that VDP will not be needed and in case such a situation arises, tax experts can handle the job efficiently on your behalf.
VDP provides tax amnesty to tax defaulters and seeking help from tax experts provide help in dealing with CRA in a better manner.